It’s hard to deny that terminating employees is a complex and sensitive part of conducting business. However, when the termination process extends to cross-border employees, the process becomes even more complicated. Businesses need to also consider international legal regulations when compliantly terminating a cross-border employee. Cross-border termination refers to the process of ending employment or an employment relationship with an employee across international borders. Cross-border employment termination involves navigating various international employment laws, cultural differences and countless jurisdiction-specific legislations.
From Canada's employment standards legislation to the United Kingdom's human rights legislation, various legal guidelines must be met when terminating global employees.
In this article, we outline the complexities of terminating global employees, best practices to consider when offboarding employees and offer a comprehensive solution for cross-border employee termination.
Termination Procedures
When terminating a cross-border employee, the employer must ensure full compliance with local termination rules by obeying the country-specific termination procedure. This includes providing a valid explanation for the dismissal, gathering the necessary termination documentation, and offering a final pay and severance package.
Some countries, such as the United States, have an at-will employment policy that allows employers to dismiss an employee for any reason (that is, without having to establish a "just cause" for termination) and without reasonable notice or warning, as long as the reason is not illegal.
Factors To Consider When Terminating Employees
The specifics of employee termination vary depending on where the employee is located, employment contract terms, and the employment regulations of the region or country.
Here are common factors to consider when terminating employees, irrespective of where they reside and work.
Review Employment Contract
Review the employment contract to ensure any included clauses are followed during the time of termination. These clauses include:
- Termination clause
- Layoff clause
- Resignation notice clause
- Terms and conditions for severance pay
- Compensation
Examining the employment contract before beginning the termination procedure allows employers to fulfill all conditions stated during onboarding.
Performance Observation and Additional Documentation
In most countries, termination of employment requires the employer to provide a valid reason. When employers consider a termination, they are encouraged to compile a record of the employee's performance and any noteworthy observations. By compiling this document, the employer is able to validate termination if the reason is related to poor work performance, misconduct or company policy violations.
When considering an employee termination, employers must provide all the necessary paperwork and documentation needed for a fair termination. This includes providing employees with a termination letter that outlines the termination date, severance pay, outstanding benefits and entitlements, and next steps. The employer must also provide a record of employment (ROE).
Notice Period and Severance Pay
In Canada, two weeks is the standard notice period. However, in countries such as Egypt, the notice period ranges from two months to three months, depending on how long an employee has worked with the company.
A notice period is the period of time between the resignation or termination letter and the last working day. This period allows the employee to figure out next steps, train another employee and complete any pending tasks. This period also serves as a transitioning period for the employer to hire and onboard new candidates to fill the soon-to-be vacant position.
A severance package refers to the pay and benefits employees are entitled to once the employee leaves the company unwillingly. In Canada, severance pay is the greater of the following: two days' wages, at the employee's regular rate of wages, for each full year that an employee has worked or five days' wages at the employee's regular rate of wages.
When terminating an employee, it is important to determine the notice period and severance pay to ensure a fair employment termination.
Best Practices and Legal Considerations When Terminating an Employee
Businesses don’t need to engage in the termination process alone. There are several best practices that will help you foster ethical and responsible employment practices when terminating global employees.
Understand Local Employment Laws
Different states, provinces and countries have varying labor law regulations. For example, according to Ontario’s Employment Standard Act, employees who work a minimum of three months are entitled to minimum statutory entitlements. A few examples of minimum statutory entitlement include holidays, breaks, parental leave and minimum notice. As a cross-border business, the employer is legally obligated to offer statutory entitlements or face the risks associated with non-compliance.
Transparent Communication and Documentation
Having transparent lines of communication and documentation is beneficial when terminating any employee. In Canada for example, whether the employee is employed by provincially or federally regulated employers, it is a part of common law to provide a detailed explanation for the reason for termination.
Failing to communicate clearly and empathetically will confuse, hurt, and cause resentment among the terminated employee and the remaining staff. Abrupt or insensitive communication damages the company's reputation and creates negative word-of-mouth.
While transparent communication is key, ensuring transparent documentation is equally as important. Documentation is crucial in the event of any disputes or legal challenges. Written notices, emails, and any agreements between the employee and employer are all valid forms of documentation.
Consider Cultural Differences
Expanding your business globally means exposure to various languages, customs and cultures. While this is seen as an advantage at the time of hiring, during the offboarding and termination process, an employer must be mindful of the cultural differences associated with this employment relationship.
Different countries have different expectations and norms surrounding terminations. This is why employers need to consider the various social cues and work culture norms of the cross-border employee when preceding the termination process.
Seek Legal Advice
If you find yourself asking questions like ‘Does the Collective Bargaining Agreement apply to this employee?’ or ‘How long is a common law reasonable notice supposed to be for this employee?’ then it's time you seek legal advice.
Incorporating Collective Bargaining Agreements
Legally, it’s important to consider Collective Bargaining Agreements or the Collective Labor Agreement as they impact the termination process. Since many countries have active unions that protect the rights of an employee and their working conditions, it becomes essential for businesses to consider these agreements during the termination process.
Data Privacy Compliance
Given the current landscape of businesses today, data privacy laws help protect and better handle personal information and other valuable business data. Many countries have adapted to a general data protection policy that safeguards employee data during and after termination to comply with data privacy laws.
When considering cross-border termination, it is highly recommended to ensure compliance with the various data privacy laws that ensure confidentiality, integrity and data protection.
Comprehensive Solution
An Employer of Record (EOR) is a comprehensive solution to cross-border employee termination. Because an EOR is the legal employer of a business’s global employees, the EOR is responsible for all HR tasks including compliant onboarding, benefits administration and subsequent offboarding. EORs have vast local labor law knowledge and experience, providing businesses with the peace of mind when hiring globally.
Borderless AI, the EOR for all Your Termination Needs
With an EOR like Borderless AI hire, manage, pay, and terminate your international employees - all through our all-in-one platform..
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Whether you're looking to terminate an employee in the United Kingdom or hire an employee in Singapore, Borderless AI simplifies the global expansion process in 170+ countries
Contact us today to find out more!
Disclaimer
Borderless does not provide legal services or legal advice to customers, contractors, employees, partners, or the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
